The return of Donald Trump to the presidency of the United States after his victory in the election on November 5 is causing serious concern well beyond American borders. Indeed, during a recent intervention in Lyon this Wednesday, November 6, 2024, Villeroy de Galhau did not mince his words. For him, “this new Trump administration would increase the risks for the global economy”. This declaration reminds Europeans of the urgency of strengthening their economic resilience and increasing their autonomy in the face of an increasingly protectionist American model.
An increased risk of protectionism and its economic effects
During his speech, François Villeroy de Galhau stressed that Donald Trump's policy, marked by aggressive protectionism, could have harmful effects for the global economy. “A Trump administration would likely lead to more protectionism,” he said. declared. This would result in higher inflation, “at least in the United States,” and a slowdown in international growth. Thus, this prospect of a return to protectionist policies is not unfounded. The new tenant of the White House has already announced his intention to impose additional customs duties, including 60% on Chinese imports, as well as an increase of 10% on those from other countries. According to a study by Roland Berger, these measures could cost the European economy up to $533 billion by 2029.
The impact of this protectionism would be particularly visible at the level of trade and the prices of imported products, with inflationary pressure which risks hampering economic recovery efforts in Europe and elsewhere. In addition, the Bank of France, through its governor, warns that such a Trump policy could negatively affect global growth dynamics and usher in a new era of trade conflicts. Europe, according to Villeroy de Galhau, should quickly “remobilize” to reduce its dependence on the American and Asian markets, and strengthen its own investment capacity.
Europe facing the challenges of resilience and economic sovereignty
Beyond protectionism, Villeroy de Galhau also spoke of Europe's structural weaknesses which could worsen its vulnerability in the face of Trump's return to the White House. He insisted on the fact that “Europe is approaching this new situation with obvious weaknesses”. Indeed, he cites in particular a “technological delay” and a significant “political division”. This situation weakens the position of the old continent in an international context where the great powers, notably the United States, now favor more nationalist strategies.
For the governor, this Trump victory must serve as a catalyst for Europe to unite and invest in its own strengths. As an example, he mentioned the enormous potential of European savings, currently underutilized, of which “several hundred billion per year” are invested outside the continent. According to Villeroy de Galhau, mobilizing these savings to finance local projects and meet European economic needs could help the EU reduce its economic dependence and strengthen its autonomy. The Capital Markets Union (CMU) project, despite years of blockage, thus appears to be a key solution for Villeroy de Galhau, in order to more effectively link European savings to necessary investments on the continent.
Through this call for European economic remobilization, Villeroy de Galhau sheds light on a crucial issue for the economic future of the continent in the face of potentially hostile American policies. If Europe manages to respond pragmatically and capitalize on its resources, it could limit the effects of increased protectionism under the next Trump administration. However, the scale of the reforms to be implemented and the need to overcome internal political divisions remind us that this economic transformation advocated by the Draghi report is not without challenges.
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